Program for Wednesday: After the transaction of any morning business (not to extend beyond 11 a.m.), Senate will resume consideration of the motion to proceed to consideration of S. 3772, Paycheck Fairness Act, and if cloture is not invoked again, Senate will proceed to a cloture vote on the motion to proceed to consideration of S. 510, FDA Food Safety Modernization Act.

Shopfloor has had offered several posts lately on the substantial flaws with the Paycheck Fairness Act, starting with its imposition of a second-guessing federal government and cash-seeking trial lawyers in the place of employers in making management decisions. Politically, the legislation always seemed like a pre-election move to motivate campaign workers and contributors in organized labor and other activist agglomerations.

Now a Senate vote must be taken to meet those political commitments, and there’s the minimal amount of work being done to demonstrate half-seriousness of intent. The White House gave Labor Secretary Hilda Solis the go-ahead to give a rare interview in the mainstream media — a brief segment in Marketplace Radio — and there’s a White House blog post by Terrell McSweeny, domestic policy adviser to the Vice President. Not the big political guns, to say the least.(continue reading…)

The most threatening piece of anti-employer, anti-jobs legislation in the lame-duck session is S. 3772, the Paycheck Fairness Act, which could come up for a cloture vote in the Senate on Wednesday.

The bill extends federal government control over wage decisions made by employers to reflect their business’ specific circumstances, setting a rigid “pay equity” standard as the priority above all other factors. The Chicago Tribune summarized the problems in an editorial, “Paycheck Fairness?”

The proposed law says that in cases where a pay disparity between men and women is challenged in court, an employer would have to prove there is some reason for the gap other than discrimination. The employer would also have to prove that the gap serves a necessary business purpose. And even then, the employer could be in trouble if a court determines that an “alternative employment practice” would serve the same purpose without skewing the salaries.

Those judgment calls go by another name: management decisions. The legislation would open businesses to wide second-guessing of decisions they made to hire and promote the most effective work force in a competitive environment. It would leave businesses with one eye on the competition and one eye on what a judge might decide in hindsight is a preferable “alternative employment practice.”

Uncle Sam to the nation’s employers: We’ll tell you how to run your business.

The bill would also be a bonanza for the trial lawyers, because it removes limits on awards in employment discrimination litigation and makes participation in class-action lawsuits a matter of opt-out, rather than opt-in.

Unfortunately, in its highlighting of the Paycheck Fairness Act, the White House’s messaging Thursday conflicts with the President’s overarching theme, that of economic recovery and jobs growth. At the same time, the messaging reminds the public of the political power of the litigation lobby.

It’s weird to be boasting about a bill that hasn’t passed yet. But more importantly, the legislation would lead to a more stagnant labor market, transfer more business wealth into the pockets of trial lawyers, and raise marginal costs of each new hire. A White House concerned about jobs should be renouncing the bill, not touting it.

The Paycheck Fairness Act would extend the federal government’s control over employers’ personnel decisions through rigid “pay equity” mandates and then expanding the grounds for litigation for even unintentional violations. In making hiring and salary decisions, an employer’s chief concern would not be whether the person is worth the price in the competitive labor market, but rather, “Am I going to get sued?”

By removing all limits to punitive and compensatory damage awards on claims made under the Equal Pay Act (EPA), the Paycheck Fairness Act (H.R. 12) would expose employers to increased threats of litigation – even when unintentional pay disparities may have occurred. Its passage would likely prompt many employers to purchase additional legal liability insurance, increasing their costs and decreasing their ability to raise wages, increase benefits or hire new U.S. House of Representatives workers. In fact, it is difficult to imagine a scenario in which the bill would not lead to lower wages and fewer jobs.

Senate Majority Leader Reid re-introduced the Senate version of the bill, S. 3722, in late September and filed cloture for possible Senate consideration in a lame-duck session of Congress. We tend to think the maneuvering is more about exciting the political base than actually pushing through the bill in a very crowded, riven post-election Congress.

Still, for employers it’s hard to ignore: A President campaigning on expanded economic opportunities for women by touting legislation that would diminish opportunities for men and women, both.

White House Advisor Valerie Jarrett has written an op-ed in today’s Washington Post in support of the Paycheck Fairness Act. Her piece uses outdated and inaccurate data to misrepresent the alleged pay gap between genders. In claiming women earn only 77 percent of what their male counterparts do, Ms. Jarrett conveniently ignores updated statistics from the Department of Labor that show the gap is much smaller. More interestingly, she ignores a more comprehensive analysis of the issue that the Department of Labor commissioned by the CONSAD group. This analysis available here was conveniently removed from the Department of Labor’s website after the Obama Administration took over the agency.

While the specifics of the alleged pay gap can be debated ad nauseum by economists, we understand why the White House felt it necessary to offer an op-ed to the Post the paper soundly rejected the proposal in an editorial in January 2009.

While we don’t always agree with the Post’s ed board on many issues, we strongly concur with their position on the bill. The Paycheck Fairness Act will not prevent actual instances of illegal pay discrimination. It will, however, allow the Federal government to second-guess almost all employee wages and encourage lawsuits that expose employers to unlimited damage awards. The bill substantially restricts employers’ ability to base pay decisions on legitimate factors such as professional experience, education, training, employer need, local labor market rates, hazard pay, shift differentials and the profitability of the organization. The legislation could expose employee wages or salaries to peers, family, friends and competitors.

It’s unfortunate that the White House and Senate leaders are pushing this type of legislation before the midterm elections for what looks to be political reasons. Congress should instead focus on getting the economy back on track and not make it harder for manufacturers to create and retain jobs.

As we noted earlier today, the Senate HELP Committee held a hearing on the Paycheck Fairness Act this morning. The NAM joined with many other employer groups in sending a letter to the HELP Committee members prior to the hearing. Our letter explains that the Paycheck Fairness Act “would jeopardize employee incentive pay and employee privacy, and promote costly litigation against even well-intentioned employers – all while doing little to prevent actual wage discrimination.”

Our letter further explains that if the bill were to become law it would:

The Senate Health, Education, Labor, and Pensions Committee has started its hearing, “A Fair Share for All: Pay Equity in the New American Workplace.” The hearing represents the return of Congressional attention to the Paycheck Fairness Act, in this case, S.182, to amend the Fair Labor Standards Act of 1938 (FLSA) known as the Equal Pay Act to increase liability and penalties for gender-based wage discrimination. The bill:

Makes employers who violate sex discrimination prohibitions liable in a civil action for either compensatory or (except for the federal government) punitive damages.

States that any action brought to enforce the prohibition against sex discrimination may be maintained as a class action in which individuals may be joined as party plaintiffs without their written consent.

Authorizes the Secretary of Labor (Secretary) to seek additional compensatory or punitive damages in a sex discrimination action.

Well, that’s fair, the lawyer remarked.

Our man Keith Smith is at the hearing and will be Tweeting developments @Shopfloor_NAM. We just know he’ll be fair.

The Senate HELP Committee this Thursday will hold a hearing on the Paycheck Fairness Act. While this bill’s title gives the casual observer the sense that it will prevent discrimination in pay, in reality it only promotes more litigation. In the process, the legislation creates tremendous uncertainty for employers who are struggling to create and retain jobs in these trying economic conditions.

This legislation will be a boon to the trial bar by allowing unlimited punitive damages and larger class action suits against employers under the Equal Pay Act. Because the Equal Pay Act is a strict-liability statute, plaintiffs’ attorneys don’t even need to demonstrate an employer’s intent to do harm to file a suit. If passed into law the Paycheck Fairness Act would force employers to second-guess every pay decision that they make.

In addition, the bill eliminates key employer affirmative defenses when presented with such claims. Just last year EEOC data shows that fewer than 5 percent of discrimination claims actually had legal grounds behind them. What does this mean? Even though a case may not have grounds, it forces employers to mount expensive defenses themselves against such claims. As The Washington Post when they rightfully pointed out that this legislation “risks tilting the scales too far against employers and would remove, rather than restore, a sense of balance.”

While illegal discrimination has no place in today’s workplaces, this legislation will not address those issues. Discrimination on the basis of gender is already illegal. The legislation does not make discrimination any more against the law, it simply opens up the judicial process to more civil lawsuits based on equal pay claims. Who benefits? Not the worker, the lawyers